Global Innovation: The Metropolitan Edition

March 16, 2012

It is increasingly well understood that cities are the primary location and mechanism of innovation and, in turn, prosperity (see “The Triumph of the City” or urban scaling). But which cities are the most innovative on earth?

For a long time, getting sub-national economic data for a large number of countries was impossible, but no longer. New data from the OECD show which cities have the most inventors in the world, measured by those who apply for patent protection in multiple countries (under the Patent Cooperation Treaty). Using data from 2005 to 2009, I analyzed these data for 1,847 metropolitan areas (or city-regions) in 48 countries to see what could be gleaned about global innovation, with the understanding that patent applications are a useful but imperfect proxy.

The most glaring finding is the sheer dominance of innovative activity by metropolitan areas. Ninety-three percent of the world’s patent applications are filed by inventors living in metropolitan areas with just 23 percent of the world’s population.

The most innovative metropolitan areas are impressive juggernauts of innovative activity. Ten metro areas account for just 2 percent of global population, but are home to the inventors of 24 percent of the world’s patent applications. They are, in order, Tokyo, San Jose, New York, Boston, Kanagawa (Japan), Shenzhen (China), Osaka, San Diego, Los Angeles, and Seoul. The five U.S. metro areas on that list spur 12 percent of patent applications, even though they represent just 1 percent of world population. All 10 innovation super-charged metro areas boast an average population size of 11 million, which allows their workers and researchers to become highly specialized in their jobs, a dynamic Adam Smith described in the “Wealth of Nations.”

Per-capita rankings of patent applications yield a different set of metro areas that lead on innovation. The most innovation-intensive metropolitan area in the world is San Diego; from 2005-2009, it logged 4.2 applications for every 1000 people. To put this in perspective, the average resident of San Diego is 38 times more likely to apply for a patent than the average person on the planet. But the United States has only one other metro area in the top 10 (San Jose ranks eighth). Several European regions populate the list. The Dutch province of Noord-Brabant, home to the prestigious Eindhoven University of Technology and the Eindhoven-Leuven-Aachen triangle, is second with 3.8 patents per 1000 residents. Next are the Swiss pharmaceutical strongholds of Basel-Stadt and Zug. The German industrial powerhouse of Ostwürttemberg and Cambridge, England--prolific in IT and biotech--rank fifth and sixth, respectively. After Tokyo and San Jose, the final two metro areas in the top 10 are home to major research universities that most Americans have probably never heard of: the Tampere University of Applied Sciences, a leading IT incubator in southern Finland; and the Korea Advanced Institute of Science and Technology in Daejon, where 2.9 patent applications are filed for every 1000 residents.

Which countries supply the most innovation-intensive metro areas? The United States with five (including Rochester, NY; Boston, and Minneapolis in addition to San Diego and San Jose) ranks third. Most leading countries are European. Germany leads with 14 in the top 50, followed by Switzerland with eight. Sweden and Israel are tied with four each. Finland has three, and Denmark, France, Japan, and the United Kingdom all have two. Austria, the Netherlands, Iceland, and Korea each contribute one. (The most innovative countries per capita are all small nations: Sweden, Switzerland, Finland, Israel, and Denmark).

One lesson from all of this is that, at least from an innovation standpoint, Europe is hardly the sclerotic continent that many Americans—especially politicians—make it out to be. Most of world’s top regional hubs of innovation are in Europe. Indeed, this impressive database wouldn’t even be possible without the research effort led by the OECD, based in Paris. This adds to the evidence that Europeans take regional economics very seriously, as should the United States. With residents of San Diego producing 135 times more patents per person than residents of Aberdeen, S.D., does it really make sense to formulate national innovation policies as if geography didn’t matter?